China’s demographic retreat and its implications

Beijing [China], February 28 (ANI): The changing population dynamics will affect the Asian giant’s economy in the years ahead, reported Europe-Asia Foundation.

The biggest problem which China would face in future is a declining workforce, which is likely to drop to 700 million by 2050 from a peak of 925 million in 2011. A glut of the labour force is already visible in the country both in the rural and urban areas. The fall in the supply of labour force from rural areas has been pushing up the wages in the country which may eventually erode the competitiveness of Chinese products.

Further, the shortage of labour, rising wages and the Chinese government’s policy of forced technology transfer may accelerate the already visible trend of exit of foreign companies from the country. Already some of them have shifted to south-east Asian countries and some of them are visualizing India as a preferred destination to set up their business, reported Europe-Asia Foundation.

China’s National Bureau of Statistics announced on January 17, 2023, that the country’s population had fallen by 8,50,000 in the year 2022. This marked the first decline since 1961 when the country was in the midst of a four-year famine following the failed “Great Leap Forward” policy.

China is already facing a decline in its working population impinging on labour supply often distorting the labour market by causing labour shortages and pushing up the wage rate.

China’s population of 16-59 age groups was 875 million, or 62 per cent of the total population. It was around 75 million less than it was in 2010.

This demographic retreat of the working-age population is a matter of concern for China while the proportion of the ageing population of the above 60 age group described in demography as a “dependence ratio” has been increasing, reported Europe-Asia Foundation.

It is also estimated by the Chinese government that by 2050, the above-60 population will account for as much as 35 per cent of the total population.

Ageing Healthcare spending is estimated that it would rise to 26 per cent of China’s GDP by 2050, up from 7 per cent in 2015. This would put huge pressure on the government budget and put pressure on capital formation and investment.

One of the disturbing demographic trends in China is the imbalance in the sex ratio.

In 2022, the sex ratio in China was approximately 105 males to 100 females. An ideal sex ratio is a one-to-one. Still, due to factors like selective abortions and different life expectancy between men and women, the sex-ratio varies in different age groups, reported Europe-Asia Foundation.

A widening gender imbalance in rural China is driving men to pay arbitrary “bride prices”, a practice that has grown so widespread that the Chinese government last week pledged to intervene. The imbalance in the Chinese population between male and female sexes has now figured in the Communist Party’s policy document for 2023 released on February 13. “Document No. 1” pledged to launch a campaign to curb “exorbitant bride price.”

Moreover, the demographic retreat of China decoded by Barclay Bram of the Asia Society Policy Institute states that there is a marked behavioural shift among the Chinese young population in the fertile age group. “Young Chinese are marrying later, having fewer children, or foregoing having children altogether”, with the number of couples who married in China dropping from 13.46 million to 8.46 million in the period from 2013 to 2020.

Whilst China wrestles with the implications in its changing demography and considers strategies to halt its population’s decline, India may have already overtaken China as the most populous nation in the World, reported Europe-Asia Foundation.

Shifting demographics naturally have political and geopolitical consequences and with Asian powers vying for economic and political power, the West should carefully consider its relations with both countries. With many European countries already wary of Chinese influence and economic clout, could demographic change be a further prompt for a shift towards India and other Asian countries?